Investors Face Big Risk Over Interest Rates: Blankfein

"For this deal to get done, you're going to have a coalition of moderates from both parties; the extreme of both parties are not going to throw in with this," said Goldman Sachs CEO Lloyd Blankfein, discussing how a deal will likely be worked out on the "fiscal cliff."

Lloyd Blankfein is worried that investors think low interest rates will last forever.

"One of the big risks that's looming is complacency. People are once again complacent about the low level of interest rates," the Goldman Sachs CEO said at the New York Times DealBook conference Wednesday.

As a result, there could be losses for investors with portfolios heavy with low interest loans, Blankfein predicted.

"At some point growth will come back. I think its going to come back sooner than people think. Now what's going to happen when growth comes back, interest rates rise?" Blankfein said. "That will have an effect on portfolios and people will have losses."

Blankfein said that Goldman is advising all its corporate clients to borrow "as much as they're going to need for as long as they think they could need it" because of the low interest rate environment.

Blankfein's words revealed a conflict at the heart of Goldman's business. It advises corporate clients to issue debt while warning investors that buying too much low-interest debt might be financially perilous.